What is Income for Child Support and Spousal Support Purposes?

The key issue in deciding what amount of child support or spousal support you should pay or receive is income. Income in BC Family Law is not just decided based on a Notice of Assessment. Income is decided based on the available money from all sources for a spouse. Let’s see what this means:

Corporate Income for Child Support and Spousal Support

If your spouse gets paid from a business or corporation he or she owns, his/her income will be both his/her personal income and also the corporate income. So as a basic rule, both those incomes need to be added to determine the true amount of money available to your spouse. On top of that, as everybody knows, many people deduct too many expenses from business income and also do not report cash income. When arguing the true income for child support and spousal support purposes, note the following:

Adding Unreported Cash Income for Child Support and Spousal Support

If:

1. You have personal knowledge that your spouse earns cash income but does not report it, you need to let the judge know and explain in detail how much cash income she/he earns, from what source, how frequently and how he/she spends it.
2. You have witnesses that can attest to cash income which is not reported such as employee, friends or relatives of your spouse, this will be a strong ground for arguing cash income existed and needs to be added back to your spouse’s income.
3. If your spouse’s bank accounts show frequent cash deposits at the bank, that’s again very good evidence to determine that your spouse’s income needs to be higher than what is stated in his or her Notice of Assessment.

Adding Back Unusual Corporate or Personal Expenses

It’s no secret that many if not most business owners write off unusual and personal expenses against the corporate income. These include but are not limited to:

1. Cellphone charges: If your spouse writes off his entire cell phone bills against business expenses but uses the cellphone for personal purposes, you can argue that sum or a part of the cellphone expenses need to be added to his or her income for child support and spousal support purposes.
2. Amortization: Although amortization is a legitimate expense according to the CRA, some amortization, including real estate amortization costs can be added back to income for child support and spousal support purposes.
3. Vehicle Expenses: again, if your spouses uses the company car for personal purposes but writes off the whole thing, including gas, insurance and maintenance as a business expense, you could argue some or all of these expenses should back added back.

There are many more expenses that can be added back to income for child and spousal support purposes. You need to first look at the T2 Corporate Income expenses to see what these expenses are and whether they are legitimate business expenses. If they are not, you can argue that they should be added back to income.

Rental Income for Child Support and Spousal Support Purposes

If your spouse owns multiple real estate properties and is renting them, he or she will have rental income. For CRA purposes some rental expenses such as the interest on mortgage, management fees and insurance can be deducted against the rental income. In family law, some of these expenses may not be legitimate and you could argue they should be added back to income for child support and spousal support purposes.

RRSP Income for Child Support and Spousal Support Purposes

If your spouse cashes out RRSPs every year or in most years, that RRSP income needs to be added to his other sources of income. However, if he or she takes out RRSPs as a one time only thing, that income will not be considered income for child support and spousal support purposes.

This is not the end of the matter. Income for child support and spousal support purposes can be a very complicated and important issue in family law. If you do not know how to properly argue the total income for your spouse, you may lose fortunes in child and spousal support. Contact our award-winning law firm for a consultation regarding what your spouse or your income is at 604-974-9529.